Swiss referendum leader discusses basic income

Swiss referendum leader discusses basic income

One of the masterminds behind the upcoming Swiss referendum on the basic income Enno Schmidt said that no matter the outcome on June 5, he will still have achieved his goal of starting a widespread discussion about the issue.

Schmidt started his basic income advocacy back in 2006 and has been pushing the idea through films, lectures and articles ever since. In 2013, he and others collected over 120,000 signatures in order to get the basic income up for a referendum in Switzerland, which he said was not an easy task.

In anticipation of the upcoming referendum, Schmidt answered some questions about the past, present and future of the basic income in Switzerland and beyond. Some of the quotations have been edited for clarity.

 

Why did you found the initiative basic income? What was your intention for the initiative in 2006? Have your goal’s changed?

The reason was to make the people more free in their decisions about their life and in their personal responsibility to live according to their own intentions.

The right to political initiatives for everyone in Switzerland and the Direct Democracy made it possible to come up with this proposal to create a general discussion throughout the entire population and to finally achieve a referendum.

The intention was to give all people a basic income unconditional in order to create a society with more variety, less fear, and more productivity in a much broader sense. Also part of the goal was to bring the idea of unconditionality to our otherwise purely functional conceptions of living. Ultimately it represents the question about what it means to be human. The goal did not change but has been enriched with more and more significance. Aspects such as the upcoming data economy, the need to strengthen civil society, the necessary power shift towards the citizens all contributed to this conception.

 

How did you happen upon the concept of the basic income? Why do you think you were drawn to the idea?

Because the basic income refers to the individual, not to a specific circumstances. It does not determine people, it enables everyone to come into play in society. It does not judge what people do. It’s a base of human kindness and a protection of privacy. It’s about respect and appreciation towards the other and it’s about self-determination. Thus new the new and unforeseen can happen and develop. Today there is no more lack of material goods. The productiveness in the old sense increases with ever less human labor. We need a space for the new productivity as we face our current challenges. We have to rethink the income supply and examine our values. Separating income and work reveals the value of work. No one should be blackmailed with his livelihood. The right to work is the right to do what you really want to do. This right needs a right to income. The unconditional basic income is a democratically coordinated income, not negotiated economically. The logic and beauty of the idea has drawn me.

 

How would you compare the public’s interest in the basic income in 2006 to the interest/support right now?

Ten years ago, we moved across the country, organized events and let others come up for discussion. We still do. But now the media has come from all over to us and spread the idea worldwide. We started from a little point with nearly no knowledge in society about the idea. And still we are far from a majority convinced of the basic income. But attention and acceptance has greatly increased. Not only in Switzerland. But Switzerland has the benefit of direct democracy. With our campaign for the vote we managed to even get some of the opponents of the basic income to acclaim the concept as the new idea for Europe. The interest grew rapidly after the World Economic Forum in Davos discussed the unconditional basic income as the most innovative and intelligent solution for the upcoming digitalization era, and once again grew rapidly due to the upcoming vote.

 

How do you feel about your chances with the upcoming vote?

With this vote, we will have established the subject firmly in society. If one in five votes is yes, then that is incredible progress. So much has moved in the minds, in fixed opinions, and new eyes have appeared. It’s the first time in history that this issue is discussed in an entire population with the serious background of a referendum to vote on and decide.

By this vote the majority may vote no, but the vote itself is an opportunity to introduce an unconditional basic income to society. But maybe in ten years the next referendum will result in a majority voting yes. Therefore, it is not so much a question about how we feel about our chances, but we already have taken the chance to create a public and broad debate about the basic income unlike anything seen before. This vote is a milestone on a path on which the debate is getting stronger at home and abroad.

 

Can you describe the process of getting the initiative on the ballot? How did you feel when the initiative was successfully scheduled for a public vote?

I felt as if the gate was opened for a heavenly reality and a really human approach, for an big event and great chance. When the Federal Chancellery had approved the people’s initiative, we had 18 months’ time to gather at least 100,000 valid signatures of Swiss citizens. This is not online. You have to go on the street in all types of weather. That is not easy. While doing so a new dynamic developed. “Generation basic income” converted the severe toil into a sporting competition. We turned the large number into achievable goals, with each individual collecting visible results, and over the long run a series of successes.

When we submitted 126,000 signatures on October 4, 2013 in the Federal Chancellery, I had the feeling of having made gotten the essentials, that the way was now open for a general major debate in society. The referendum itself is already a point of arrival. We offer the proposal: The citizens vote.

 

How has your outlook changed for the prospect of the basic income over the last ten years?

I realized early on that a basic income will come. The idea is as strong as the idea of democracy or human rights. It is of the same kind. It is even the same idea. The question is not whether it comes, but how it comes and by whom, by what interests. This prospect has been confirmed over the time. Already in the design of the meaning of an unconditional basic income is its way of being introduced. An unconditional basic income not only allows more flexibility, it also requires more. It comes through the people who are affected or it comes out wrong. It may not come automatically as a result of automation. It may not come from the rich to the poor and not as an economy measure. It should not be a new feudalism, no philanthropic colonialism and not to plug old holes. If the unconditional does not affect everybody, it is for no one. The comprehensive and greatness of this idea became even clearer for me and thus also the possibilities to use it quite differently.

 

What would the implications be if the Swiss vote yes on the referendum? What would the implications be if they vote no — including for you and your advocacy?

With a majority yes the introduction will be prepared and probably start with pilot projects such as in Finland. This will take some years. About the amount of a basic income and the type of finance it probably will come to next public votes. Also other points of the basic income can lead to new referendums. Overall, I think, it will need 20 years. With a majority no the discussion also will go on. This referendum has given such a strong thrust to the debate. The development will go along as well, just not within the authorities. Also pilot projects can arise in some cities and cantons. And the development in other countries continues. We see things not isolated in Switzerland. We see it in conjunction with the other areas experimenting with the basic income. Another referendum in Switzerland is possible and the introduction will go more quickly. Time does not stand still and an unconditional basic income becomes more and more inevitable.

 

A Proposal to Legally Charter BIEN as an International Nonprofit Organization

Louise Haagh, co-chair
Karl Widerquist, co-chair

The two of us have proposed a new governing structure for BIEN. This proposal replaces BIEN’s statutes with the attached document, available on the “About BIEN” page of this Basicincome.org. The goal of it is to retain BIEN’s current structure (as much as possible) while officially chartering BIEN as an international non-profit organization compliant with Belgian law. Doing so will give BIEN an official legal standing and allow it to do things such as raise funds over the internet. Potentially this will allow BIEN to engage in and fund more research and events, as well as make it possible for other potential partner organisations to include BIEN as a legal organisation in similar activities. This document replaces BIEN’s statutes as its official governing structure, but all BIEN policies not contradicted by this document remain in effect. All BIEN life-members will become life-members of this newly recognized organization.

The perhaps most important fact to note is that the legal form of the new AISBL ensures that the AISBL is governed directly by BIEN’s elected officers, subject to the GA in the usual way.

Basic Income Earth Network's Profile Photo

BIEN logo

It is important to emphasize that some differences between the old BIEN statutes and this document exist, but in our judgement they are minor and even necessary. This includes for instance the provision that we are able to exclude members in certain circumstances, however subject to final GA approval. Being a legal organisation it is not only required by law, but it seems sensible for us, to have this provision. Many minor changes are the result of compromises worked through over many e.mails and conversations. We are however overall confident having worked through many versions of this document, to include Louise, Karl, and – in the last stages – Philippe, we have done what we can do ensure BIEN’s current practices prevail in this new structure.

China’s minimum income guarantee you’ve never heard of

China’s minimum income guarantee you’ve never heard of

Back in the 1990s, China started experimenting with a minimum income guarantee that topped off incomes to a minimum level set by local governments. China called the program dibao, meaning minimum livelihood guarantee, expanding the program nationwide in 2007.

In Beijing the urban monthly dibao standard is 1050 RMB ($161.50 USD) and the rural standard is 800 RMB ($123.04 USD). For urban residents, this is about five dollars USD a day.

However, even this paltry amount often does not make it to those in poverty.

A report by the World Bank found that for every 10 RMB spent on the dibao, only 1 to 2.4 RMB reached individuals in poverty (cited by the Economist). The World Bank also found the dibao program only lowered the poverty gap by 6.5 percent.

Corruption and inability to determine households’ poverty status have plagued the program. According to Lu Yang in the Indian Journal of Labour Economics, based on 2010 survey data only 21 percent of poor households were able to receive the dibao, while more than half of dibao recipients were above the poverty line.

Many local governments go to great lengths to investigate whether dibao households are secretly hoarding wealth, visiting recipients’ homes and observing whether the household has too many “high quality” products to qualify.

Others are concerned with the dibao’s effect on the poor’s effective marginal tax rate. Higher effective marginal tax rates lower the likelihood that a household member will seek work.

If a household’s average income per person goes above the dibao standard, they could sacrifice the entirety of the benefit. Each household member raises the household’s dibao standard by 100 percent. For example, in Beijing where the standard is 1050 RMB per month, a two-person household would face a 2100 RMB dibao standard. In turn, larger households are more susceptible to the problem of high effective marginal tax rates.

In some instances, it is possible that a household will have a 100 percent effective tax rate due to the dibao benefit. In these cases, the household will have the same income regardless of whether a household member chooses to work or not. Based on data from an essay in Population and Development a family of three in Tianjin with one household member employed would have the same income as an identical family that does not work at all. Clearly this has the potential to undermine labor participation if the drop off is this steep in reality.

China plans to lift 70 million people out of poverty by 2020. Such a massive undertaking requires a robust social welfare system. As it stands, the dibao program is not equipped to do this heavy lifting.

However, the dibao does provide a starting point for China to experiment with universal coverage.

The 2014 World Bank report conducted economic simulations that demonstrated expanding dibao coverage was more effective than increasing the benefit size at lowering the poverty gap.

Like the dibao, the central government of China could initiate pilot programs that universalize the dibao cash transfer, eliminating the income and wealth requirements to qualify for the dibao benefit.

Universalizing the program would potentially address many of the issues plaguing dibao, such as the high effective marginal tax rates and low rate of impoverished individuals that receive the dibao.

China’s economic miracle successfully lifted the most individuals out of poverty in world history. To do so, China undertook some dramatic reforms that completely reshaped Chinese society. Now in order to completely eradicate poverty, China may want to take yet another drastic step with a universal basic income guarantee.

On why basic income has not yet been deployed: now it’s Namibia

On why basic income has not yet been deployed: now it’s Namibia

So the basic income implementation process in Namibia was halted1. Is that surprising?

After an amazing effort by minister Zephania Kameeta to get a basic income implementation program for Namibia up to the (minister) council, it was just swept away and replaced by a program intended to alleviate poverty through economic growth. The progressive approach was replaced by the traditional economic orthodoxy of endless growth and continued inequality. This program, named “Harambee Prosperity Plan”, also includes the creation of a food bank and grants for young people conditional on participation in this food bank and a few other community activities.

Let’s not forget that Namibia was one the few places on Earth where a basic income experiment was actually carried out (at Otjivero), and with excellent results. Among the positive results were better nutrition, clothing, and transportation, more savings and a rise in entrepreneurship. You could now be thinking: Ok, so they tried basic income in a pilot project with excellent results, and they had a minister who was a champion of the basic income who could take it on to national-level implementation. So what’s stopping them now? The answer seems simple, but it is also hard to deal with.

The answer is this:  big corporate interests need poverty. And it so happens that Namibia has plenty of poor people2. In a recent essay, a tentative connection was established between poverty (in economic terms) and the refusal/denial of the South African government to test for basic income, let alone implement it at the national level. Basically, the argument entails that government officials deny the proven advantages of basic income, delaying its development, to protect corporate interests. These interests profit massively from the cheap labour that a mass of helpless poor people can provide.

The economic structure of Namibia, as related to income, is not much different from the South African, as can be seen in Figures 1 and 2. The similarity is striking, hence the same unwillingness of the Namibian political elite to try out the implementation of basic income, despite all the theoretical and proven practical advantages it provides for the people.

safricahouseholdspread

Figure 1 – The spread of households within the income distribution in South Africa, 2008

 

namibiahouseholdincome

Figure 2 – The spread of households within the income distribution in Namibia, 2015

 

A clear image starts to appear. In these countries, poverty is an asset for big industry, which has, to a great extent, bought political power. So what can be done about it? Well, two things can happen: poverty-dependent corporations automate up to a great extent3, and/or Namibians put pressure on their elected officials – through democratic processes – to get basic income implemented, despite the corporate grip on regime politicians. The first one is highly probable, and so we will be watching a fading interest of corporations in financing political power, since with mechanical machines and Artificial Intelligence they can get their way even without resorting to poor human labour. The second one, less likely but entirely possible, may grow from the first one, when political leaders get less engaged with corporate power – and although remaining eager to please them, no longer have the same financial incentive, thus becoming more susceptible to democratic pressures.

Anyway, automation may actually not be a deterrent but rather a spark for some sort of basic income implementation. We seem to be facing a win-win situation for basic income: automation and/or democratic pressures will guarantee that basic income becomes a reality in the next few years in Namibia, and elsewhere. At this point, only ruthless autocratic power can dismiss it and keep it away for much longer. The time for change has come.

 

More information at:

Claudia and Dirk Haarnann, 2015. “Relief through cash: impact assessment of the emergency cash grant in Namibia”, July 2015

Claudia and Dirk Haarnann, 2015. “Piloting basic income in Namibia – critical reflections on the process and possible lessons”, Paper delivered at the 14th Congress of the Basic Income Earth Network (BIEN) Munich – 14-16 th September 2012

André Coelho, “On why basic income has not yet been deployed”, Basic Income News, 17th March 2016

 

Notes:

1 – At the beginning of April 2016, the Namibian president presented his state of the nation address as well as the “Harambee Prosperity Plan”, which focuses on combating poverty by the creation of jobs through economic growth, plus the introduction of a food bank.

2 – According to the Republic of Namibia National Planning Commission “Poverty and deprivation in Namibia 2015”, the account for poverty is that 26,9 % of the population lives under the official poverty line.

3 – According the report “Technology at work v2.0”, it is estimated that in countries like Ethiopia the risk of job automation covers 85% of all jobs in the coming decades (other examples like China and India rate at 77% and 69% of automation risk, respectively).

Basic income will be at the core of monetary policy in the 21st century

Basic income will be at the core of monetary policy in the 21st century

To tackle spiraling deflationary trends, governments and central banks will soon have no other choice but to resort to printing money and giving it directly to the people.

Article by John Aziz, originally published on azionomics.com under the title “Universal Basic Income Is Inevitable, Unavoidable, and Incoming.”

The last time I saw universal basic income discussed on television, it was laughed away by a Conservative MP as an absurd idea. The government giving away wads of cash responsibility-free to the entire population sounds entirely fantastical in this austerity-bound age, where “we just don’t have the money” is repeated endlessly as a mantra. Money, they say, does not grow on trees. (Only as figures on the screen of a computer).

In this world, universal basic income seems like a rather distant prospect. Yes, there are some proposals, like Finland which is set to start local experiments in 2017 and Switzerland which is holding a referendum on universal basic income next month. I don’t expect the vote to pass. The current political climate is just too patriarchal. We live in a world where free choice is unfashionable. The mass media demonizes the poor as feckless and too lazy and ignorant to make good choices about how to spend their income. Better that the government spend huge chunks of GDP employing bureaucrats to administer tests, to moralize on the virtues of work, and sanction the profligate.

But this world is fast changing, and the more I study the basic facts of economic life in the early 21st century, the more inevitable universal basic income begins to seem.

And no, it’s not because of the robots that are coming to take our jobs, as Erik Brynjolfsson suggests in his excellent The Second Machine Age. While automation is a major economic disruptor that will transform our economy, assuming that robots will dissolve jobs entirely is just buying into the same Lump of Labour fallacy that the Luddites fell for. Automation frees humans from drudgery and opens up the economy to new opportunities. Where once vast swathes of the population toiled in the fields as subsistence farmers, mechanization allowed these people to become industrial workers, and their descendants to become information and creative workers.

As today’s industries are decimated, and as the market price of media falls closer and closer toward zero, new avenues will be opened up. New industries will be born in a neverending cycle of creative destruction. Yes, perhaps universal basic income will help ease the current transition that we are going through, but the transition is not the reason why universal basic income is inevitable.

Welcome to the world of hyperdeflation

So why is it inevitable? Take a look at Japan, and now the eurozone: economies where consumer price deflation has become an ongoing and entrenched reality. This occurrence has been married to economic stagnation and continued dips into recession. In Japan — which has been in the trap for over two decades — debt levels in the economy have remained high. The debt isn’t being inflated away as it would under a more “normal” rate of growth and inflation. And even in the countries that have avoided outright deflationary spirals, like the UK and the United States, inflation has been very low.

The most major reason, I am coming to believe, is rising efficiency and the growing superabundance of stuff. Cars are becoming more fuel efficient. Homes are becoming more fuel efficient. Vast quantities of solar energy and fracked oil are coming online. China’s growing economy continues to pump out vast quantities of consumer goods. And it’s not just this: people are better educated than ever before, and equipped with incredibly powerful productivity resources like laptops, iPads and smartphones. Information and media has fallen to an essentially free price. If price inflation is a function of the growth of the money supply against growth in the total amount of goods and services produced, then it is very clear why deflation and lowflation have become a problem in the developed world, even with central banks struggling to push out money to reinflate the credit bubble that burst in 2008.

Much, much more is coming down the pipeline. At the core of this As the cost of superabundant and super-accessible solar continues to fall, and as battery efficiencies continue to increase the price of energy for heating, lighting, cooking and transportation (e.g. self-driving electric cars, delivery trucks, and ultimately planes) is being slowly but powerfully pushed toward zero. Heck, if the cost of renewables continue to fall, and advances in AI and automation continue, in thirty or forty years most housework and yardwork will be renewables-powered, and done by robot. Water crises can be alleviated by solar-powered desalination, and resource pressures by solar-powered robot miners.

And just as computers and the internet have made huge quantities of media (such as this blog) free for users, 3-D printers and disassemblers will push the production of stuff much closer to free. People will simply be able to download blueprints from the internet, put their trash into a disassembler and print out new items. Obviously, this won’t work anytime soon for complex objects like smartphones, but every technology company in the world is hustling and grinding for more efficiency in their manufacturing processes. Not to mention that as more and more stuff is manufactured, and as we become more environmentally conscious and efficient at recycling, this huge global stockpile of stuff acts as another deflationary pressure.

hyper-deflation

These deflationary pressures will gradually seep into services as more and more processes become automated and powered by efficiency increasing machines, drones and robots. This will gradually come to encompass the old inflationary bugbears of medical care, educational costs and construction and maintenance costs. Of course, I don’t expect this dislocation to result in permanent incurable unemployment. People will find stuff to do, and new fields will open up, many of which we are yet to imagine. But the price trend is clear to me: lots and lots of lowflation and deflation. This, ultimately, is at the heart of capitalism. The race for efficiency. The race to do more with less (including less productivity). The race for the lowest costs.

I’ve written about this before. I jokingly called it “hyperdeflation.”

Global Japanization

And the obvious outcome, at the very least, is global Japan. This, of course, is not a complete disaster. Japan remains a relatively rich and stable country, even after twenty years of deflation. But Japan’s high level of debt — and particularly government debt — does pose a major concern. Yes, as a sovereign currency issuer borrowing in its own currency the Japanese government runs no risk of actual default. But slow growth and deflation are stagnationary. And without growth and inflation, the government will have to raise taxes to cover the deficit, spiking the punchbowl and continuing the cycle of debt deflation. And of course, all of the Bank of Japan’s attempts at reigniting inflation and inflating away that debt through complicated monetary operations in financial markets have up until now proven pretty ineffectual.

This is where some form of universal basic income comes in: ultimately, the most direct stimulus for lifting inflation and triggering productive economic activity is putting cash in the people’s hands. What I am suggesting is nothing less than printing money and giving it away to people — as opposed to trying to push it out through the complicated and convoluted transmission mechanism of financial sector lending. This will ultimately become governments’ major backstop against debt deflation, as well as the temporary joblessness and economic inequality created by technological acceleration. Everything else, thus far, has been pushing on a string. And the deflationary pressure is only going to become stronger as efficiency rises and rises.

Throw enough newly-created money into the economy, inject inflation, and nominal tax revenues can rise to cover the debt load. Similarly, if inflation gets too high, cut back on the money-creation or take money out of circulation and bring inflation into check, just as central banks have done for the last century.

The biggest obstacle to this, in my view, is the interests of those with lots of money, who like deflation because it increases their purchasing power. But in the end, rich people aren’t just sitting on hoards of cash. Most of them do have businesses that would benefit from their clients having higher incomes so as to increase spending, and thus their incomes. Indeed, in a debt-deflationary spiral with default cascades, many of these rentiers would face the same ruin as their clients, as their clients default on their obligations.

And yes, I know that there are legal obstacles to fully-blown ‘helicopter money‘, chiefly the notion of central bank independence. But I am an advocate of central bank independence, for a variety of reasons. Indeed, I don’t think that universal basic income should be a function of fiscal spending at all, not least because I think that dispassionate and economically literate central bankers tend to be better managers of monetary expansion and contraction than politically motivated — and generally less economically literate — politicians. So everything I am describing can and should be envisioned as a function of monetary policy. Indeed, what I am advocating for is a new set of core monetary policy tools for the 21st century.

Jobs in ‘security’ are about to end

 

peaceJobs in security are on the verge of obsolescence. Security jobs usually refer to night watchers, guards, soldiers, intelligence officers, police officers and so on. Armies, police, security companies and related industries employ millions of people worldwide, wielding vast amounts of power and influence on society and the natural world. However, and in spite of that, they are doomed. Why? Because people want to be happy and, on the verge of global societal breakdown, are beginning to understand that their happiness is linked to everyone else’s and that this positive state of being is so much better than the ever present fear, uncertainty and isolation. Happy people tend to be fraternal, cooperative and empathetic (and their happiness reinforced by these behaviors), which in the long term means there will be no need for “security” jobs, as we know them today. Much of the violence, war and conflict in the world today stems from the pure need for maintaining these “security” structures, which are ridden with a mentality of war, mistrust and distorted notions of what security means for most people.

But what is a security-specialized mega-entity, which employs dozens of thousands of people (for example the US Army), to do when people seem oblivious of their past importance and meaning and simply do not value them as much (if at all)? It tries to survive. And that may mean resorting to unconventional, radical approaches, such as covertly instigating conflict or actively promoting or supporting entities or actions which lead to scarcity, inequality and fear among people (which are powerful instigators of conflict and violence). That is their mantra as survival strategy goes. But guess what? The worldwide arrival of the basic income is imminent.

Not a novelty in itself, the basic income is arriving now with a renewed strength, strongly linked to values of peace, equality and freedom. Freedom to pursue happiness, to have a share of what should be shared resources, to connect more deeply with other fellow human beings and the natural world. The basic income, besides helping to liberate millions of people from directly and indirectly imposed slavery, also gives a bright opportunity for those strapped to the “security” business to abandon it, now that their hearts are no longer aligned with its associated roles. With less critical mass, fewer incentives and fewer individuals with a war-prone mentality , security entities will crumble.

Now I am not saying many innocent people who are employed by these entities deserve to be miserable – the idea is to protect them from collapse by systems such as the basic income and allow them to finally start doing what they really believe in with their lives. However, only dramatic transformations in our society (which stem from changes at the personal level) will eliminate security entities as we know them. Jobs in security are about to end and that is – given new and refreshed social approaches like the basic income – great news.